Since the growth of technology, there is a growing fear brewing among the people that technology will soon surpass our control and capacities to contain it.
Is it actually the case? Well, it is much debated among the community that considers the adoption of technology to such an extent harmful.
The latter, which considers the adoption of technology, in specific Artificial Intelligence mandatory for the next generation of smart and industry optimized services.
Regardless, AI is steadily becoming a common name in multiple industries. Changing the lives of individuals and the corporate sector alike. Effectively growing into one of the hottest trends of this era, which is still in its infancy.
Artificial Intelligence is witnessed as being implemented not only in healthcare, business intelligence, and marketing but also in the financial and insurance industries. Evolving into Fintech applications and Insurtech with the passage of time.
In order to gauge a comprehensive idea of how AI is enabling the growth of other sectors of the economy. We need to go back and understand where it all began.
What were the driving factors behind the need for Artificial Intelligence? and what makes it so desirable, specifically for the development of the Fintech scene.
Shift Towards Artificial Intelligence
The financial industry with its traditional institution proves to be a stark contrast in comparison to the more modern business requirements and setups in today’s financial landscape. Earlier, these institutions and some existing till date perform dated manual procedures.
These procedures prove to more than just time-consuming. Where so many other elements of a financial institution suffered because of the delay in operating manual operating procedures.
A neat example of this being KYC or more commonly known as Know Your Customer procedures. Which were and still at some places performed by banks through the old fashioned, form and manual input manner.
Banks put in a lot of man-hours to verify information collected from the customer, through corroborating multiple resources from multiple locations and coming to a conclusion.
Usually, after many days or even weeks at a stretch. Accounting to the rise in, inconvenience to existing customers, lost potential customers and error-prone information entry. This led to not only the inconsistency in the collection and management of information but also subsequent inefficiencies in the KYC processes.
These inconsistencies were exploited to conduct fraud, ranging from the smallest and trivial ones to the largest perceivable. Resulting in much displeasure at part of the Banks and Financial Regulators. Thus a drastic and much-needed change was necessitated.
What Made AI so Desirable for Fintech?
As discussed above, the problems being faced by the lack of intelligent systems in the financial sector. Led to the inception of Fintech to supplant and solve the existing issues being faced by legacy financial institutions.
All in gratitude to the modern generation of tech-centered financial institutions, that utilize AI among the masses to deliver cost-effective financial institutions.
Artificial intelligence made possible for the processing of data in real-time. Allowing smoother data integration and migration altogether.
Allowing existing processes to speed up drastically. Fintech became a synonym for innovation and convenience combining financial services and technology to deliver unparalleled services.
Incorporating AI into the mix introduced automated decision making to otherwise traditional business logic.
The inclusion of AI into traditional business processes through Fintech made possible for sales optimizations, including conversion metrics and cost efficiencies that led to the adoption of such financial services by the masses.
In order to reduce overheads, it was important for businesses to curtail operational cost. Fintechs running on an AI engine were able to offer cost-effective solutions with no compromise on quality. This was achieved by incorporating AI at each stage and thus reducing the cost accordingly.
How AI is creating its Mark in the Industry
AI today is more common around us than it was just a few years ago. The reason? Demand and innovative adoption towards a culture of improved service delivery, that has grown exponentially in the last few years.
Artificial Intelligence is seen being adopted by traditional financial institutions, like banks to develop products which offer customers more value in a much lesser price.
Without the AI earlier, customers had limited options under stricter conditions that accounted for much customer dissatisfaction and displeasure.
Banks are in a better position to understand the requirements of their customers more ideally now. Simplifying banking and finance with multiple algorithms that are flexible and configurable, according to changing regulatory requirements.
Another important application of AI in the modern economy is Risk Assessment, which utilizes both AI and machine learning to perform an assessment on an individuals risk. Based on multiple factors and elements that are established beforehand and vary accordingly, once each individual is introduced.
An AI establishes a score or rating that comprehensively describes the risk profile of the individual. Accordingly, to which, an automated(AI-run) solution can apply the corresponding due diligence measures and optimize the KYC procedure.
Considering the advancement in technology, Fintechs thrive on innovation and customization which is derived from the latest technology. Businesses are on the verge of a technological shift, by adopting what’s necessary to stay afloat in a highly competitive industry.
Businesses are tasked to balance, customer expectation, optimize business processes and enable growth simultaneously. This is possible from intelligence AI systems, that automate key processes to preserve resources for other key areas to ensure greater effectiveness of the solutions for problem-solving.
Author Bio: Amelia Matthers